Amy Y. Karpf Labor and Employment Law Blog on Lawyers.com

The distinction between independent contractors and employees is one many people do not understand. But it is often one of the first issues a Pennsylvania employment attorney must address when taking on an employee’s claim. This is because many federal and state laws that guarantee certain rights to employees do not apply, or apply differently, to independent contractors. Additionally, independent contractors are usually not entitled to crucial benefits such as unemployment compensation and workers compensation.

Whether an individual is an employee or independent contractor depends on the context. For the purposes of unemployment compensation, only two factors are considered:

• Does the alleged employer exercise control and direction over the alleged employee?
• Does the alleged employee work in a customarily independent trade or profession?

Some important factors to address

For the purpose of workers compensation, Pennsylvania labor attorneys must address several additional factors:

• Is the alleged employee responsible for results only?
• What are the terms of any agreement between the parties?
• What is the nature of the work performed?
• What degree of skill is required for performance?
• Who supplied the tools used in performance?
• How is payment made?
• Is the work part of the alleged employer’s regular business?
• Does the alleged employer have the right to fire the alleged employee at any time?

Determining whether someone is an employee or contractor

The requirements of the Fair Labor Standards Act (FLSA)—which governs minimum wages, maximum hours, and overtime standards—do not apply to independent contractors. In determining whether an individual is an employee or contractor under the FLSA, federal courts examine the economic reality of the relationship. This includes factors that assess how much an alleged employee depends on an alleged employer:

• Does the alleged employee provide services that are an integral part of the business?
• How permanent is the relationship?
• Does the alleged employee have a stake in the business?
• How much control does the alleged employer exercise?
• Does the alleged employee have an opportunity for profit or lose?
• Does the alleged employee compete with others on the open market?

Many other laws administered by the Equal Employment Opportunity Commission (EEOC) also do not apply to independent contractors. These include the Americans with Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), and Title VII of the Civil Rights Act. The EEOC relies on similar factors in distinguishing between employees and independent contractors in these contexts. Pennsylvania employment lawyers have experience with these employee rights statutes and can advise you if the nature of your work qualifies you as an employee under a particular federal or state law.

Contact us

Karpf & Karpf, P.C. is a Bucks County labor and employment law firm. They have offices in both Pennsylvania and New Jersey and are available by phone at 215-639-0801 in Pennsylvania or 609-683-4022 in New Jersey.